Federal Court of Australia

Copeland (liquidator) v Odeesh, in the matter of FBF Transport Pty Ltd (in liq) (No 3) [2025] FCA 352

ORDERS

THE COURT ORDERS THAT:

1.    Order 6 made on 4 December 2024 be vacated.

2.    The Defendant pay the First Plaintiff’s costs of the proceeding assessed on an indemnity basis.

3.    The amount of costs payable by the Defendant in accordance with order 2 be referred to a Registrar of the Court, acting as a referee (Referee) pursuant to Pt 28 Div 28.6 of the Federal Court Rules 2011 (Cth), for determination on a lump-sum basis in accordance with the lump-sum procedure in the Costs Practice Note (GPN-COSTS) dated 25 October 2016.

4.    The First Plaintiff’s costs of the lump-sum costs determination in accordance with order 3 be taken to form part of the First Plaintiff’s’ costs of the proceeding.

5.    Within 14 days of the Referee’s determination in accordance with order 3, the First Plaintiff is to arrange to have the matter listed for a further case management hearing unless the parties consent to the making of orders in respect of the adoption of the Referee’s report or the making of a lump-sum costs order.

Note:     Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WIGNEY J:

1    The plaintiff, Mr Brendan Copeland (Liquidator) is the liquidator of FBF Transport Pty Ltd. FBF was wound up in insolvency by order of the Supreme Court of Victoria on 21 August 2024. The defendant, Mr Alfredo Odeesh, is FBF’s sole director, secretary and shareholder. FBF previously conducted a transport business and owned or had an interest in several motor vehicles. Following his appointment, the Liquidator endeavoured to obtain possession of those vehicles. Those efforts were initially unsuccessful, largely due to a lack of cooperation on the part of Mr Odeesh. The Liquidator was ultimately essentially forced to commence this proceeding in order to compel Mr Odeesh to deliver up the vehicles. Orders were made requiring Mr Odeesh to deliver up the vehicles and eventually he complied with those orders, though not without some disobedience and delay on his part. Having essentially achieved his objective, the Liquidator does not press for any final relief and seeks to discontinue the proceeding. The only remaining issue relates to the costs of the proceeding.

2    The Liquidator seeks an order that Mr Odeesh pay the Liquidator’s costs of the proceeding assessed on an indemnity basis and that the costs payable pursuant to that order be determined on a lump-sum basis by a Registrar acting as a referee. Mr Odeesh has not indicated that he consents to the making of the orders sought by the Liquidator. He was given the opportunity to file evidence and submissions in relation to the question of costs, though he failed to do so.

3    For the reasons that follow, I consider that it is appropriate to order Mr Odeesh to pay the Liquidator’s costs assessed on an indemnity basis. I also consider that the quantum of costs should be determined on a lump-sum basis by a Registrar acting as a referee.

The course of the proceeding

4    Short summaries of the nature and course of the proceedings are contained in two prior judgments of the Court: Copeland (liquidator) v Odeesh, in the matter of FBF Transport Pty Ltd (in liq) [2024] FCA 1136 (the First Judgment) and Copeland (liquidator) v Odeesh, in the matter of FBF Transport Pty Ltd (in liq) (No 2) [2024] FCA 1400 (the Second Judgment). These reasons should be considered together with the reasons in those two judgments. At risk of some repetition, following is a short summary of the course of the proceedings to date.

5    The Liquidator commenced this proceeding by Originating Process filed on 25 September 2024. He applied for interlocutory relief including an order that the District Registrar issue a warrant pursuant to s 530C of the Corporations Act 2001 (Cth) authorising the Liquidator to seize six motor vehicles believed to be owned by FBF and an order requiring Mr Odeesh to deliver up those vehicles to the Liquidator pursuant to r 14.11(1)(a) of the Federal Court Rules 2011 (Cth).

6    The Liquidator’s application was heard by the Duty Judge (Stewart J) on 26 September 2024. His Honour made the interlocutory orders sought by the Liquidator. It is readily apparent from the reasons for judgment of Stewart J (the First Judgment) that his Honour was satisfied that Mr Odeesh was aware even at that early stage that the Liquidator had been endeavouring to recover the vehicles. His Honour noted that the Liquidator and his solicitors had received telephone calls and emails from several firms of solicitors who purported to act for Mr Odeesh, but that nothing had come of those communications. Justice Stewart concluded that the evidence revealed a “persistent pattern of non-cooperation and evasion” on the part of Mr Odeesh from which his Honour inferred that Mr Odeesh was “engaging in a concerted campaign to delay [the Liquidator’s] investigations and repossession of the vehicles”: First Judgment at [7].

7    As events transpired, the orders made on 26 September 2024 were personally served on Mr Odeesh, however the warrant was unable to be executed.

8    On 18 October 2024, the Court (Goodman J) made a further order requiring Mr Odeesh to deliver up the vehicles. The order included a penal notice pursuant to r 41.06 of the Rules. The orders including the penal notice were not, however, able to be personally served on Mr Odeesh.

9    On 25 November 2024, the Liquidator applied for a further delivery up order together with an order for substituted service on Mr Odeesh. It was ultimately unnecessary for the Liquidator to press his application for an order for substituted service because counsel appeared for Mr Odeesh at the hearing on 25 November 2024. The Court (Wigney J) did, however, make further orders for the delivery up by the defendant of four motor vehicles: a Volvo FH16 Prime Mover, a Freighter Trailers Trailer, a Mercedes Benz CLA250 and a Scania R560. The order required Mr Odeesh to deliver-up the vehicles to the premises referred to in the order by no later than 4.30 pm on 29 November 2024.

10    Mr Odeesh did not comply with the delivery-up order made on 25 November 2024. He did not deliver-up the vehicles on or before 4.30 pm on 29 November 2024.

11    The matter next came before the Court on 4 December 2024. It would perhaps have been open to the Liquidator in the circumstances to apply for an order that Mr Odeesh be punished for contempt pursuant to r 42.11 of the Rules given his failure to comply with the orders made on 25 November 2024. Instead, however, the Liquidator applied for an order pursuant to r 41.10(1) of the Rules which required Mr Odeesh to attend Court to be examined in relation to his non-compliance with the Court’s orders, as well as an order requiring the production of specified documents.

12    The evidence adduced by the Liquidator in support of his application on 4 December 2024 indicated that one of the remaining vehicles (a Volvo FH16 Prime Mover) had been delivered-up to the address nominated in the orders on the morning of 3 December 2024. There was no evidence to suggest that the other three vehicles identified in the orders of 25 November 2024 had been returned. Nor was any evidence adduced by Mr Odeesh to explain, let alone justify, his non-compliance with the orders made on 25 November 2024. The Court made the orders sought by the Liquidator over the objections of Mr Odeesh: see the Second Judgment. The orders required Mr Odeesh to appear before the Court on 10 December 2024 at 2.15 pm.

13    Mr Odeesh caused two of the remaining vehicles (a Freighter Trailers Trailer and a Scania R560) to be delivered-up prior to 10 December 2024. He also advised the Liquidator that the remaining vehicle that Mr Odeesh had been ordered to deliver up (the Mercedes Benz CLA250) had been traded in for a different vehicle and that the replacement vehicle had been in an accident and was undergoing repairs. That vehicle was also the subject of a secured loan. The Liquidator accordingly decided not to pursue the recovery of that vehicle and indicated that, as a result of those recent developments, he no longer wished to pursue the examination of Mr Odeesh on 10 December 2024. The examination was accordingly vacated, and the proceeding was listed for a further case management hearing on 24 February 2025.

14    At that case management hearing on 24 February 2025, the Liquidator foreshadowed his application for indemnity costs and orders were made for the filing of any evidence and submissions in relation to costs. As noted earlier, no evidence or submissions were filed by or on behalf of Mr Odeesh.

Relevant principles

15    The Court has a broad discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act): LFDB v SM (No 2) [2017] FCAFC 207 at [7].

16    The Liquidator’s application in relation to costs raises three issues in respect of the exercise of the discretion in respect of costs: first, the circumstances in which it may be appropriate to make a costs order in cases where there has been no final hearing or determination of the merits; second, the circumstances in which it may be appropriate to order that costs be assessed on an indemnity basis; and third, the circumstances in which it may be appropriate to make an order that costs be determined and awarded on a lump-sum basis.

Costs where there has been no hearing on the merits

17    While the Liquidator has obtained the interlocutory relief sought by him, he now does not press the final relief sought by him in the Originating Process and effectively seeks to discontinue the proceedings. It is accordingly necessary to consider the principles that apply in those circumstances.

18    The exercise of the discretion in relation to costs is usually relatively straightforward when there has been a hearing on the merits and the outcome of the proceedings is clear. In such cases, costs ordinarily follow the event: see Latoudis v Casey (1990) 170 CLR 534 at 543, 566 to 568; [1990] HCA 59. Where, however, there has been no hearing on the merits because the moving party no longer wanted to pursue the action, usually because of some supervening event, the situation is not so clear.

19    The general principles that guide the exercise of the court’s discretion in relation to costs where there has been no hearing on the merits have been considered in a number of cases: see, in particular, Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6; ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270 at [5]-[6]; Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84. The general principles established by those cases may be briefly summarised as follows.

20    First, where there has been no hearing on the merits of an action, but the moving party no longer wants to proceed with the action, the Court cannot try a hypothetical action between the parties so as to resolve the question of costs.

21    Second, in such a case, the Court can nevertheless, in an appropriate case, make an order as to costs.

22    Third, an example of a case where the Court can make a costs order, despite the absence of any hearing on the merits, is where one of the parties is found to have acted unreasonably in pursuing or defending the proceeding until the litigation was settled or its further prosecution became futile.

23    Fourth, another example of a case where a costs order may be appropriate in those circumstances is where it is possible for the Court to conclude, without reviewing swathes of evidence or resolving disputed questions of fact, that one party had been successful and the other party unsuccessful, or that one party was almost certain to have succeeded if the matter had gone to trial.

24    Fifth, “it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs”: ONE.TEL at [6]. In the former type of case, the exercise of the Court’s discretion would usually justify the award of costs to the successful party.

Indemnity costs

25    The usual rule is that an order for costs means costs “as between party and party”: r 40.01 of the Rules; see also the definition of “costs” in the Dictionary in Sch 1 of the Rules; Mango Boulevard Pty Ltd v Whitton [2015] FCA 1352 at [12]. A party or person who is entitled to costs may, however, apply for an order that costs be awarded in their favour “other than as between party and party”: r 40.02(a) of the Rules. That includes an order that costs be awarded on an indemnity basis.

26    The discretion to award costs on a basis other than as between party and party, including on an indemnity basis, is “unfettered, save that it must be exercised judicially and not arbitrarily or capriciously”: Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union (No 4) [2018] FCA 684 at [96]. The discretion must also be exercised in light of the requirement that the Court consider any failure by a party to comply with the overarching purpose of the civil practice and procedure provisions to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: see ss 37N(4), 37M(1) of the FCA Act; LFDB v SM (No 2) [2017] FCAFC 207 at [7].

27    The discretion to depart from an order for party and party costs will generally not be exercised unless there is some special or unusual feature or the justice of the case so requires: Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179 at [3]; Seven Network Ltd v News Limited (2009) 182 FCR 160; [2009] FCAFC 166 at [1102]; Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 at [5].

28    The purpose of a costs order is to compensate the party in whose favour the costs order is made, not to punish the other party: King v Yurisich (No 2) [2007] FCAFC 51 at [19]; Seven Network at [1099]. An award of indemnity costs is to “serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs”: Hamod v State of New South Wales (2002) 188 ALR 659; [2002] FCAFC 97 at [20]; see also Kazal v Independent Commission Against Corruption and Ors (No 2) [2020] NSWSC 17 at [60]-[62]; Cirillo at [4]; Melbourne City Investments at [5].

29    The circumstances in which it may be found to be unreasonable for a party to be subjected to the expenditure of any costs are not fixed or closed. They include circumstances where the party against whom the costs order is sought engaged in misconduct in relation to the litigation, including where the party by its lax conduct invited the litigation, or where the party unnecessarily protracted the proceedings: see generally Oshlack v Richmond River Council (1998) 193 CLR 72 at [69]; Cooper (Receiver), in the matter of Green Grain Processing Technologies Pty Ltd (Receivers Appointed) (No 3) [2024] FCA 1142 at [23]. Indemnity costs may also be appropriate where the party against whom the order is sought failed to comply with the overarching purpose of the civil practice and procedure provisions to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible.

Lump-sum Costs Orders

30    The Court’s preference, where it is “practicable and appropriate to do so”, is for the making of a lump-sum costs order: Costs Practice Note (GPN-COSTS) at [4.1]. Utilisation of a lump-sum costs procedure is “at the discretion of the judge” and the parties must be “given a fair opportunity to present their views as to the appropriateness of utilising a lump-sum costs procedure”: GPN-COSTS at [4.2]. The Court’s preference for lump-sum costs orders is no doubt to avoid the almost inevitable delay and expense of the taxation procedures in Pt 40 Div 40.2 of the Rules: see Michael Wilson & Partners Ltd v Porter (No 3) [2022] FCA 998 at [22]. Paragraph 4.9 of GPN-COSTS envisages that in an appropriate case, a judge may refer the costs dispute to mediation or to a Registrar as a referee.

An indemnity costs order in favour of the Liquidator is warranted

31    I am satisfied that the circumstances of this case warrant a costs order being made in favour of the Liquidator and that the Liquidator’s costs should be assessed on an indemnity basis.

32    While it may be accepted that there has been no hearing on the merits in respect of the final relief sought by the Liquidator, the Liquidator has, at each stage of the proceeding, obtained the interlocutory relief he sought against Mr Odeesh. The fact that the Liquidator obtained that interlocutory relief effectively obviated the need for the Liquidator to press for any final relief. As the successful party, the Liquidator is plainly entitled to his costs in respect of his interlocutory applications.

33    To the extent that any issue arises from the fact that the Liquidator did not press for any final relief, I am satisfied that it is nonetheless appropriate to order Mr Odeesh to pay the Liquidator’s costs because Mr Odeesh has engaged in relevant misconduct in respect of the litigation. As noted earlier, Mr Odeesh has engaged in a persistent pattern of non-cooperation and evasion and conducted a concerted campaign to delay the Liquidator’s investigations and repossession of the vehicles. His conduct in that regard effectively compelled the Liquidator to commence the proceeding and his conduct while the proceedings have been on foot, including his failure to comply with Court orders, resulted in delay and caused the Liquidator to incur further and unnecessary costs.

34    Mr Odeesh’s unsatisfactory conduct in effectively inviting the litigation and then unreasonably and unnecessarily prolonging it also justifies an order that the Liquidator’s costs of the proceeding be assessed on an indemnity basis. There could be no doubt that Mr Odeesh has failed to comply with the overarching purpose of the civil practice and procedure provisions to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. It was in all the circumstances manifestly unreasonable for Mr Odeesh to have subjected the Liquidator to the expenditure of any costs in relation to the proceeding. It is accordingly appropriate in all the circumstances that Mr Odeesh fully compensate the Liquidator in respect of the costs of the proceeding.

35    I should reiterate and emphasise that Mr Odeesh was given the opportunity to file evidence and make submissions in respect of the costs orders sought by the Liquidator. He declined to take up that opportunity. That is consistent with his conduct generally in respect of this proceeding.

Costs should be determined on a lump-sum basis by a Registrar

36    I am also satisfied that it is appropriate in all the circumstances for the Court to utilise the lump-sum costs procedure. If that procedure is not employed, given Mr Odeesh’s failure to engage with and cooperate with the Liquidator to date, it would be inevitable that the Liquidator would have to have his costs taxed. I do not consider that it would be appropriate for the Liquidator to have to incur the expense and delay involved in having his costs taxed. In my view, the appropriate course would be to appoint a Registrar as a referee to determine the appropriate lump-sum costs order.

37    Orders will be made accordingly.

Associate:

Dated:    11 April 2025